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Mahindra Satyam: Scandal, acquisition & redemption

Economic Times | Posted By : |6 years ago |225 Views

Economic Times

Some 20 months after B Ramalinga Raju owned up to cooking the books of Satyam Computer and 17 months after the Mahindra group won the bid to acquire the scandal-struck software firm, a few crucial milestones have been crossed in the long journey back to recovery and respect.

CP Gurnani is a man in a hurry. It is nearly impossible to catch up with him. He's either in Delhi, where his home is; or in Hyderabad, at the headquarters of Mahindra Satyam, known till not too long ago as Satyam Computer Services; or in Pune where Tech Mahindra (TechM), the flagship IT outsourcing company of the Mahindra group is based; or in Mumbai where the auto to software conglomerate is headquartered.

When Gurnani isn't in any of these cities, he's likely to be on a flight headed overseas to meet clients. Gurnani, a former head of TechM's global operations, took over as CEO of Mahindra Satyam in June 2009. That's two months after the Mahindras won the race to acquire the beleaguered IT services firm for a little under Rs 2,000 crore.

The sale was triggered after founder B Ramalinga Raju confessed in early 2009 to fudging the books of the then fourth largest software exporter. So if Mahindra Satyam, like Gurnani, is in hurry, you know why: the market value of the company, which in better times stood at over Rs 12,000 crore, crashed to Rs 2,700 crore after Raju confessed to the scam. Today that figure is a more respectable Rs 8,300 crore, but Mahindra Satyam still has a long way to go.

GROWTH PHASE

With its books in order and two major lawsuits settled - a class action suit slapped by US shareholders and a lawsuit by Upaid Systems - the company now has its agenda cut out: to go after large projects and win back customers. The management is also banking on a merger with TechM to get the full benefits of the acquisition.

"The lawsuits were at the back of clients' minds. Some of them were demands for $1-1.5 billion and, if we couldn't pay, we would have had to declare insolvency," says Vineet Nayyar, the company's 72-year-old chairman and strategy lynchpin.

Areport by technology research firm IDC flatteringly describes Mahindra Satyam's journey as the Rise of the Phoenix, but Nayyar, Gurnani and the A team know it's still early days yet as the company steps up the pace. "We see it (the journey to recovery) as three phases: resurrection, rejuvenation and getting back into growth. Now we are in the growth phase," says Gurnani.

"There is a sense of speed, relentless hunger and pressure on all to perform, which wasn't there earlier," adds AS Murty, CTO, describing the mood in Mahindra Satyam.ASM, as the soft-spoken CTO is known, was briefly the CEO when the government took control of the company after Raju stepped down.

He and T Hari, chief marketing and people officer, are two old Satyam hands Gurnani retained in the core team. Rakesh Soni, COO, and Atul Kunwar, global head of sales, came in from TechM. Vijayanand Vadrevu, chief strategy officer, joined from Wipro in 2009.

Manish Malhotra, who is chief vertical solutions officer, re-joined Satyam from Patni Computer a few months ago. The good news for Mahindra Satyam is that many employees are now willing to come back. Sriram Papani, who spent 13 years in Satyam and who started the enterprise business services practice, re-joined in February as head of that practice. Some 750 people who left the company have returned, says Hari.

In the past two years, the company has recruited over 10 senior executives mostly in client-facing and senior sales roles to fill the gaps created when several leaders quit after the new management took over. One big hurdle was ensuring the fusion of the old with the new.

As an insider puts it: "There were two tsunamis. The first happened because of the scam and the second because of the cultural divide." A senior executive at a southern IT services firm explains the Mahindras may have been a bit hard on the old guard.

"They alienated many senior leaders with their approach when they took over. These leaders carried a lot of credibility with customers. The culture in companies in the South is softer and you need to respect it," he says. Perhaps the larger goals ensured the team worked as one. "In fiscal 2010, the focus was on keeping existing customers. A year later the focus, while still on keeping customers, was on adding new ones, says Vadrevu. "Now it is time to kick-start the US growth engine."